ILLINOIS  ) 
Legis.  V 


H.  E, 


rj/  *  <  ft/) 


REPORT 

or  THE 

COMMITTEE  ON  BANKS  AND  CORPORATIONS, 

y. 

TO  WHICH  WAS  REFERRED  SO  MUCH  OF  THE  GOVERNOR’S  MESSAGE 

AS  RELATES  TO 

STATE  BANKS. 


FEBRUARY  16,  1847. 

Laid  on  the  table,  and  3000  copies  ordered  to  be  printed. 


13th  Assem. 

1st  Session. 


Mr.  HICK,  from  the  committee  on  Banks  and  Corporations,  to  which  was  re- 
referred  so  much  of  the  Governor’s  message  as  relates  to  State  Banks,  made 
the  following 

REPORTS 

■»:  &.«• 

The  subject  of  banking  has,  for  many  years,  received  the  attention  of  capital¬ 
ists  and  statesmen.  It  has  been  attacked  and  defended,  by.  every  class  hnd  grade 
of  intellect ;  it  has  been  tried  and  tested  in,  everyTorm,  under  every  condi¬ 
tion  of  finance,  which  the  genius, the  lea^iijng,  the^  legisMtion  of  all  Christendom 
could  develope.  jK-afc'*  -  if'  -ffi-  r. 

The  student  of  history,  who  reads  of tijmes  and  nations  gorie  by, 

and  who  has  studied  the  institutions  of  StR^^Nvith  th^vie^v  to  .discover  the  ope¬ 
ration  of  laws  upon  the  property  and  lroerw  of  the  people,  willSfind,  in  nearly 
every  epoch,  and  in  every  land,  that  capitS  and  labor  have  .b§en  •b'bt  in  opposi¬ 
tion  to  each  other.  These  two  great  elements  of  national  wealth  ajid  happmess, 
which  of  all  others  should  operate  in  harmony,  without  hostility  or  •o^ifii^^iave 
been  made  to  arm  themselves,  in  hostile  collision,  the  one  against  thjBther:  The 
rich  and  the  poor,  the  one  class  acting  in  concert,  because  few  iJKumber,  and 
the  other  divided  in  energy,  because  too  many  to  meet  in  mass,  nave  been  the 
constant  theme  of  historical  description. 

Your  committee  know  well  the  insidious  arguments  which  learning  can  advance 
to  prove  that  capital  is  more  essential  to  national  wealth  and  happiness  than  labor 
can  be.  They  are  not  ignorant  of  the  fact  that  there  exists  in  our  own  cornau* 


s» »  » 


2 


i  » 

nities,  a  class  of  men  who  plead  with  eloquence  the  doctrine  that  civil  societies 
may  create  and  bestow  the  rights  of  man,  as  well  as  protect  them.  These  argu¬ 
ments  might  be  expected,  and  would  be  popular  in  a  nation  where  hereditary 
wealth  is  the  only  essential  to  place  and  power.  They  are  suited  to  an  age  when 
man  cannot  be  free,  because  laws  he  never  enacted  are  above  him.  But  in  a  free 
commonwealth,  they  must  be  unpopular.  In  a  land  where  the  maxims  of  civil 
liberty  are  taught  to  children,  though  slow  the  progress,  and  late  the  consumma¬ 
tion,  these  doctrines  must  yield  to  the  principles  of  truth  and  equality. 

The  original  rights  of  personal  security,  of  personal  liberty,  and  of  private 
property,  are  natural  and  unalienable  rights.  They  are  a  part  and  parcel  of  our 
mental  and  physical  constitutions.  Without  these,  man  would  net  be  man.  En¬ 
joying  these,  under  the  protection  of  law,  he  is  a  freeman;  deprived  of  them,  he 
is  a  slave.  The  disposition  to  acquire  property  is  innate,  and  society  should 
proceed,  in  all  its  regulations  respecting  it,  upon  this  fundamental  maxim.  Laws 
cannot  give  the  love  of  property  nor  the  disposition  to  acquire  it.  They  pro¬ 
ceed,  if  founded  in  truth  and  justice,  upon  the  proposition  that  this  innate  dispo¬ 
sition  may  be  developed,  and  its  acquisitions  and  interests  protected.  Here  all 
laws  on  property  should  stop.  At  this  point  they  have  accomplished  all  that  jus¬ 
tice  yields  to  them.  But  when  legislation  creates  property,  and  then  bestows 
that  property  on  the  citizen,  every  fundamental  principle  of  natural  justice  is 
violated;  society  sets  itself  above  the  unalienable  rights  of  individuals;  and  civil 
institutions,  instead  of  blessing,  curse  mankind. 

This  argument  is  susceptible  of  forcible  illustration,  Suppose  a  State  enacts 
a  law  that  the  property  of  a  man  shall  descend  to  but  one  of  his  heirs.  Riches, 
more  than  any  thing  else,  produce  and  nourish  clanship  and  classes  of  interests. 
The  man  of  wealth,  having  both  labor  and  capital  at  his  disposal,  is  able  to  com¬ 
pete  with,  overpower,  and  destroy  the  man  who  has  labor  only.  Wealth,  then, 
giving  unnatural  power  to  individuals,  and  rich  individuals,  more  than  others, 
having  the  disposition  and  means  of  clanship,  such  a  law  would  most  inevitably 
result  in  building  up  in  that  Slate,  wealthy  and  exclusive  classes,  who,  whether 
called  nobles  or  peasants,  would  exercise  a  controlling  influence  over  the  desti¬ 
nies  of  the  people.  By  law  their  estates  cannot  pass  from  them.  The  laws  give 
their  property,  from  generation  to  generation,  extraordinary  means  of  accumula¬ 
tion.  What  is  the  result?  The  laws  give  them  these  advantages,  in  every 
practical  sense,  as  effectually  as  though  nature  had  written  aristocracy  on  their 
foreheads.  Let  us  look  around  us  and  see  whether  or  not  we  can  find  an  ex¬ 
ample  of  legislation  on  property,  still  more  hostile  to  natural  justice,  and  which 
presents  a  yet  more  flagrant  instance  of  creating  wealth  by  law,  and  giving  it  to  the 
citizen.  Ten  men  amongst  us,  having  one  million  of  dollars,  in  gold  and  silver, 
come  to  a  Legislature,  and  get  an  act  of  incorporation,  by  which,  upon  the  actu:  1 
cash  in  hand,  they  may  issue  upon  the  people  three  millions  of  paper  dollars,  to 
pass,  if  once  received,  as  three  millions  of  gold  and  silver.  Has  not  the  Legis¬ 
lature  given  those  ten  men  all  the  advantages  of  the  use  of,  and  the  interest  ac¬ 
cruing  on,  two  millions  of  dollars  ?  We  presume  that  no  person  is  so  blinded  or 
so  lost  to  a  sense  of  propriety  as  to  deny  this  position.  Who  does  not  see  in 
such  a  proceeding,  a  direct  and  stupendous  fraud  upon  the  labor  of  the  people  ? 
Does  not  such  a  law  exalt  the  value  of  capital,  and  draw  the  enhanced  value  of 
it  from  the  masses  ?  Is  it  no  advantage  to  draw  interest  on  three  times  the 
amount  of  an  actual  sum  of  cash  ?  We  speak  not  of  men  ;  our  attention  is  not 
now  directed  to  parties;  but  we  discuss  those  fundamental  principles  of  civil  soci¬ 
ety  which  every  man  should  hold  sacred.  We  object  to  banks,  because  by  their 
incorporation  your  committee  see  a  flagrant  violation  of  the  essential  maxim  of 
human  rights.  In  these  institutions,  law  loses  its  natural  functions,  and  instead 
of  protection,  it  creates  and  bestows  advantages,  in  which  all  cannot  participate, 


3 


and  by  which  the  few  can  reap  advantages  only  by  a  licensed  robbery  of  the 
many. 

But  there  is  another  view  of  the  subject,  to  which  the  committee  have  given 
their  reflections,  and  to  which  they  would  draw  the  attention  of  the  House. 
Banks  cannot  tail  to  exert  an  immoral  influence  on  that  community  where  they 
are  set  in  operation.  No  one  pretends  that  paper  money  adds  one  iota  of  real 
capital  to  the  country.  No  one  pretends  that  banks  can  be  even  safe  for  a  time, 
unless  their  issues  are  based  on  specie  in  vault,  and  given  to  bona  tide  business 
transactions.  No  one  ever  claimed  for  them  the  ability  to  outride  the  pressures 
occasioned  by  revulsions  of  foreign  commerce.  And  we  do  not  remember  to 
have  ever  heard  their  warmest  friends  claim  lor  their  officers  more  financial  skill, 
or  commercial  forecast,  than  thousands  of  gentlemen  who  are  their  customers. 
If  they  do  not  add  to  the  real  capital  of  the  country,  then  the  price  that  their  mo¬ 
ney  gives  to  property  must  be  fictitious.  If  their  issues  are  made  only  on  spe¬ 
cie,  then  they  are  never  able  to  redeem  beyond  the  actual  specie  in  vault;  and 
issues  made  beyond  it,  are,  in  the  nature  of  things,  of  that  value  only,  which 
they  give  to  other  property.  Now  the  shrewdest  merchants  fail;  fail  often  on 
bona  fide  transactions,  and  are  ruined  by  reverses  no  human  foresight  can  foresee. 
And  as  long  as  human  nature  remains  what  it  is,  banks  will  be  liable  to  fail,  even 
when  honestly  conducted.  And  the  property  of  community  where  a  bank  explodes, 
sinks  in  proportion  to  the  depreciation  of  her  paper.  This  is  a  fact  none  can  deny; 
it  is  one  which  all  sensible  men  acknowledge ;  and  indeed  it  is  so  true,  that  it  lias 
given  rise  to  the  common  saying  amongst  the  people,  “banks  and  bankruptcy 
follow  each  other.”  Now  is  it  not  evident  that  a  species  of  institutions,  which, 
in  their  very  nature,  gives  fictitious  values — which,  from  their  operations,  must 
inflate  or  depress  the  prices  of  three  times  their  capital,  whenever  one-third  of 
their  nominal  capital  is  in  danger — is  it  not  evident,  we  say,  they  must  have  an  im¬ 
moral  tendency  upon  a  people?  Bank  men  know  that  when  the  specie  is'sought 
for,  the  whole  property  of  the  country  sinks  to  its  value,  and  yet  they  set  in  ope¬ 
ration  an  engine  whicli  is  to  create  the  crisis,  and  then  crush  the  victims.  When 
specie  is  sought,  the  customers  of  the  banks  press  harder  for  relief,  and  ask  for 
bills,  in  order  to  buy  the  specie.  The  banks  contract  their  issues,  when  of  all 
other  times  their  issues  are  most  needed.  All  these  things  they  foresee,  and  an¬ 
ticipate,  and  prepare  for.  Property  falls,  bank  hills  fall,  specie  rises,  and  in  an 
instant  the  bank  stops  specie  payments  ;  and  when  their  paper  is  (down  to  a  few 
cents  on  the  dollar,  send  out  private  agents  to  buy  up  their  bills.  Very  soon  a 
few  of  the  people  learn  the  secret.  A  few  shrewd  men  in  a  town  club  together, 
get  large  discounts  on  notes  of  hand  just  before  the  bank  fails,  purchase  all  the 
specie  they  can,  purchase  all  the  property  they  can,  and  when  the  bank  wants 
their  money  on  the  notes,  these  men  break — cry  out  “  ruined;”  and  so  they  give 
the  bank  a  fine  excuse  to  break  with  them.  One  general  smash  follows.  Long 
homilies  are  preached  against  the  times.  Farmers,  mechanics  and  laborers,  who 
are  not  in  the  secret,  pressed  by  necessity,  sell  their  broken  hank  bills  to  the  best 
advantage;  and  when  the  whole  scene  closes,  the  officers  are  rich,  the  stockhold¬ 
ers  are  rich,  the  sharpers  and  brokers  about  the  towns  are  rich,  and  the  masses 
have  lost  all  these  legalized  plunderers  have  amassed.  The  Legislature,  by  bank 
incorporations,  have  created  institutions  which  can  make  more  money  by  contrac¬ 
tions  and  suspensions  than  by  honestly  prosecuting  their  enterprise.  These  are 
temptations  held  out  to  men  by  law  which  few  can  withstand.  In  cities  they 
work  better  and  make  more  during  long  seasons  of  uninterrupted  commerce  than 
they  can  by  revulsions.  But  whenever  occasion  offers,  when  trade  is  changed, 
and  exports  or  imports  fluctuate,  they  will  develope  their  propensities,  and  ex¬ 
ercise  their  legal  prerogatives.  This  results,  not  so  much  from  the  natural  pro¬ 
pensities  of  the  human  heart,  as  from  the  natural  tendency  of  the  institutions 


4 


created  by  the  Legislature.  Man,  untempted,  and  unaided  by  legal  devices,  is  apt 
enough  to  play  the  cheat,  and  to  live  by  fraud  and  robbery.  But  when  the  Le¬ 
gislature  puts  into  his  hand  an  engine  of  oppression,  whose  existence  originated 
in  the  doctrine  that  policy  is  the  best  honesty,  then  his  conceptions  know  no 
bounds,  and  his  avarice  triumphs. 

But  suppose  that  banks  could  be  created  with  such  balances  and  checks  thrown 
around  them,  as  that  they  would  never  fail:  suppose  men  would,  notwithstand¬ 
ing  the  opposite  temptation  and  interest,  so  operate  with  a  bank  as  that  it  should 
do  a  legitimate  business,  and  instead  of  seizing  the  public  purse  by  revolutions  in 
commerce,  should  really  pilfer  silently  and  agreeably  by  bank  discounts  and  notes 
in  circulation  !  Would  a  people,  even  then,  make  themselves  the  richer,  or 
happier,  or  wiser  by  these  institutions  ? 

Your  committee  conceive,  that,  even  in  this.,  the  most  favorable  position  the  ar¬ 
gument  can  take,  banks  would  still  be  a  curse  to  any  people.  They  loan  paper 
money,  and  in  order  to  find  customers,  they  must  find  a  community  in  which  a 
few  men  wTill  organize  to  support  them.  For  if  they  should  loan  to  every  man 
alike,  if  they  extend  their  paper  blessings  into  all  parts  of  the  community,  and  to 
all  branches  of  trade  and  business,  they  would  instantly  destroy  the  advantages 
of  money.  No  man  wrould  then  seek  their  assistance,  because  he  could  have  no 
opportunity  of  speculation  and  of  profit  not  enjoyed  by  his  neighbors.  The  avow¬ 
ed  object  of  paper  money,  is  to  supply  a  currency  for  commerce.  Now,  if  all 
men  in  a  State  equally  had  the  money,  no  one  could  make  money  by  a  moneyed 
operation  with  the  banks.  These  institutions,  then,  must  find  a  community  in 
which  only  a  few  will  borrow,  and  to  secure  their  patronage,  these  banks  will 
loan  to  but  a  few.  What  is  the  object  of  this  measure  ?  It  is  self  evident. — 
The  bank  and  its  supporters  well  know  that  they  live  by  speculations  in  prices, 
not  by  actual  values,  as  measured  by  production  and  consumption.  They  well 
know  that  the  only  way  to  make  money  by  prices,  is  to  purchase  when  the  mar¬ 
ket  falls,  and  to  sell  when  it  rises.  The  whole  success,  then,  of  banking  opera¬ 
tions,  depends  upon  fluctuations  in  price,  produced  by  these  banks  and  their 
friends.  The  whole  community  could  not  agree,  nor  participate  in  such  manoeu¬ 
vres.  The  recourse  of  the  banks,  then,  is  to  a  few.  To  these  few,  they  make 
their  principal  loans,  and  these  few  operate  with  the  paper  money  upon  the  ig¬ 
norance  and  the  necessities  of  those  who  are  not  learned  in  the  wisdom  of 
banking. 

To  sustain  them  in  this  branch  of  their  argument,  your  committee  have  found 
ample  facts  and  illustrations,  in  the  several  bank  reports  made  to  the  Legislature 
by  the  State  Bank  of  Illinois.  The  population  of  the  State,  in  1840,  was 
478,929.  The  capital  stock  of  the  bank  was,  in  1839,  $3,644,655.  The  whole 
number  of  persons  who  owed  the  bank  in  all  her  vast  operations,  appears  in  the 
following  table: 

Number  of  persons  in  the  discount  line,  who  owe  $200  and  less,  1,011 
”  ”  200  to  500  741 

500  to  1,000 


n 


■M 

n 


>> 

» 

»> 

» 


386 

1,000  to  3,000  341 

3,000  to  5,000  71 

5,000  to  10,000  49 

10,000  to  15,000  13 

15,000  to  20,000  8 

20,000  to  50,000  9 

50,000  and  over  3 


5 


Total  of  persons  who  owe  on  real  estate  and  bills,  as 


principals 

and  securities, 

$200 

and  less, 

1 ,8.75 

200 

to 

500 

1,408 

500 

to 

1,000 

713 

j> 

» 

1,000 

to 

3,000 

732 

»> 

3,000 

to 

5,000 

172 

3) 

5,000 

and  over 

202 

The  last  table  includes  the  first,  and  makes  total  number  of  debtors  to  the 
Bank,  -------  5,102 


A  careful  dissection  of  these  tables  will  show  a  state  of  facts  which  afford 
perfect  demonstration  to  our  argument.  If  the  lovvest  sum  named  be  divided 
by  half,  so  as  to  average  it,  then  1,875  persons,  as  principals  and  securities,  re¬ 
ceive  at  $100  each,  $187,500  of  the  bank  facilities;  202  persons  receiving 
$5,000,  get  $1,010,000,  and  3  persons  who  get  $50,000,  take  up  $150,000. — 
But  your  committee  find  that  this  institution  had  at  one  time  loaned  one  firm, 
Messrs.  Godfrey,  Gilman  &  Co.  of  Alton,  the  enormous  sum  of  $800,748  00: 
and  that  it  had  devoted  to  the  trade  in  lead,  to  one  solitary  branch  of  commerce, 
the  sum  of  $506,905  31.  The  officers  of  the  bank  had  received  vast  facilities, 
which  are  shown  in  the  following  table: 


Date. 

No.  of 
Officers. 

As  Payers. 

Endorsers. 

Discounters. 

August  16, 

1835 

9 

$2,100  00 

$400  00 

$4,000  00 

November  16, 

3? 

9 

17,298  98 

8,700  00 

4,568  75 

February  16, 

1836 

9 

9,500  00 

20,390  69 

1,393  75 

May  16, 

33 

10 

13,100  00 

19,793  19 

800  00 

August  16, 

33 

10 

9,800  00 

27,866  87 

600  00 

November  16, 

33 

10 

29,340  38 

25,242  50 

16,600  00 

February  16, 

1837 

10 

31,560  00 

48,648  00 

13,280  00 

May  16, 

33 

10 

46,800  00 

52,349  21 

29,285  41 

August  16, 

33 

11 

44,360  00 

74,205  85 

33,665  94 

November  16, 

33 

11 

52,034  37 

78,985  69 

32,090  94 

February  16, 

1838 

11 

63,870  62 

99,738  99 

41,803  90 

May  16, 

33 

11 

62,574  82 

73,665  55 

2,933  62 

August  16, 

33 

15 

81,042  92 

57,746  84 

28,093  92 

November  16, 

33 

14 

87,787  57 

92,392  24 

34,522  78 

February  16, 

1839 

14 

120.984  65 

72,427  97 

91,605  24 

May  16, 

33 

12 

104,283  24 

74,282  70 

31,418  74 

August  16, 

33 

12 

127,507  83 

78,938  00 

38,196  35 

November  16, 

33 

12 

121,355  08 

74,886  00 

30,274  17 

Total, 

- 

$1,067,400  16 

$962,660  29 

$435,053  71 

Here  is  shown,  that  in  one  discount  day,  February  16,  1839,  fourteen  bank 
officers  borrow  $120,984  65;  that  on  the  same  day,  they  endorse  for  their  friends 
to  the  amount  of  $72,427  97,  and  as  discounters  receive  $91,605  24;  making 
in  all,  the  sum  of  $285,017  86,  or  $20,358  43  each.  That  during  the  term  of 
four  years  and  two  months,  these  officers  and  their  friends  received  the  exor¬ 
bitant  sum  of  $2,465,094  16;  which,  divided  by  12,  the  average  number  of  offi- 


6 


cers  receiving  it,  gives  to  each  bank  officer  the  sum  of  $205  424  51,  in  bank¬ 
ing  facilities.  A  sum  sufficiently  large  to  pass  the  whole  nominal  capital  of  the 
bank  through  the  hands  of  twelve  men  every  live  years  and  a  half. 

Your  committee  would  sustain  their  argument  by  one  illustration,  drawn  from 
the  financial  history  of  the  bank  of  the  United  States.  From  September,  1830, 
to  February,  1832,  that  institution  loaned  to  Thomas  Biddle  &  Co.,  the  large 
amount  of  $10,446,571.  By  a  reference  to  the  report  of  the  Secretary  of  the 
Treasury  of  the  United  States  for  1832,  it  appears  that  nearly  one  third  of  the 
whole  banking  capital  of  this  nation  was  loaned  out  to  the  officers  and  the  rela¬ 
tives  of  the  officers  of  the  bank. 

Our  argument  is  this:  banks  always  seek  a  community  where  they  can  find 
and  sustain  a  few  customers  through  whom  they  can  issue  their  paper  upon  the 
people.  They  could  prosper  in  no  other. 

Merchants,  who  draw  bills  of  exchange  on  shipments  of  produce,  and  manu¬ 
facturers,  seldom  use  them.  Their  own  names,  with  their  consignments  abroad, 
are  better  than  bank  endorsements.  But  if  price  is  to  be  raised,  on  which  to 
base  a  speculation,  banks  eome  into  play,  but  grant,  for  the  sake  of  argument, 
that  no  natural  rights  are  subverted,  and  that  the  banks  would  never  blow  up, 
and  never  cause  convulsions  in  commerce  by  specie  suspension.  Yet,  we  ask, 
would  ever  such  banks,  producing  such  a  state  of  things,  giving  such  vast  sums 
of  money  to  so  few  customers  and  friends,  amassing  all  the  profits  growing  out 
of  these  fluctuations  in  prices,  add  to  the  wealth,  to  the  happiness,  or  to  the  lib¬ 
erty  of  the  people.  We  admit  that  the  people  may  not  be  robbed  by  force,  and 
on  the  highway.  We  admit  that  wealth  may  heap  itself  around  the  palaces  and 
plantations  of  a  few;  and  that,  by  the  magic  ofthis  monopoly,  the  works  of  art  and 
of  learning  may  be  bid  to  arise.  But,  yet,  we  ask,  is  not  this  a  direct  tax,  le¬ 
vied  by  law,  on  the  masses,  the  revenue  of  which  goes,  without  right  and  with¬ 
out  justice,  into  the  pockets  of  those  who  least  deserve  it  ?  Why  is  it,  that 
those  men  who  most  constantly  urge  upon  us  acts  for  bank  incorporations,  will 
not  invest  their  money  in  commerce,  in  manufactures,  or  in  agriculture  ?  Why 
do  they  not  seek  investments  in  insurances  or  in  works  of  internal  improve¬ 
ments  ?  The  reason  is  obvious.  Banks  afford  greater  profits  with  lighter  risks. 
Banks  give  the  ascendency  of  capital  over  labor.  Banks  give  the  most  posi¬ 
tive  and  the  most  omnipotent  power  over  the  property  and  the  persons  of 
the  people.  They  know  no  law  but  interest;  they  cherish  no  friendship 
but  that  of  caste  ;  they  study  no  science  but  finance.  We  blame  not 
the  men.  Our  argument  is  not  leveled  against  the  persons  who  combine,  but 
against  the  principle  of  the  combination.  These  institutions  live  in  the  law, 
and  draw  their  force,  and  exert  their  prerogatives  over  the  sanctions  of  the 
constitution.  Here  we  raise  our  objection.  To  this,  we  would  call  the  atten¬ 
tion  of  the  House,  and  against  the  continuance  of  such  legalized  systems  of  pub¬ 
lic  robbery,  would  we  urge  the  resentment  of  a  great  and  a  free  people. 

If  we  have  succeeded  in  the  object  of  our  argument,  your  committee  have 
shown  that  banks  violate  the  unalienable  rights  of  property,  inasmuch  as  by 
them,  the  law  creates  property,  instead  of  protecting  it,  and  gives  that  property 
to  the  citizen.  We  have  shown  that  banks  have  an  immoral  tendency,  because 
they  lead  men  knowingly  into  courses  of  dealing  directly  calculated  to  rob  and 
ruin  community.  And  we  have  shown  that,  admitting  they  commit  neither  of 
the  foregoing  wrongs,  they  yet  concentrate  wealth  in  the  hands  of  a  few,  which 
is  taken  by  law  from  the  many.  With  \our  committee,  then,  these  propositions, 
if  once  established,  are  sufficient  to  arm  them  against  every  motive  which 
might  appeal  to  a  legislator  to  induce  acts  for  the  incorporation  of  banks. 

But  the  citizens  of  Illinois  are  addressed  by  another  class  of  reasons,  why 
they  should  go  again  into  banking.  We  are  told  that  the  paper  of  other  States 
will  ciiculate  among  us,  and  that  if  any  thing  is  to  be  made,  let  poor  debt  bur- 

\ 


7 


dened  Illinois  make  it.  To  this  suggestion,  we  will  address  a  few  arguments 
in  reply.  The  best  market  for  bank  paper  is  in  the  close  vicinity  of  the  banks 
from  which  it  issues.  Why  ?  Because  those  banks  are  compelled  to  take  it 
when  offered  to  them,  in  payment  of  debts  due  to  them.  When  a  bank  is  quoted 
at  par  in  a  district  of  circulation,  it  goes  every  where  without  question.  But 
the  moment  that  bank  paper  is  at  a  discount,  debtors  who  first  gave  their  notes 
for  it,  and  set  it  afloat,  will  seek  it  at  a  discount,  "with  which  to  lift  their  notes. 
This  causes  paper  at  a  discount  to  seek  an  early  return  to  the  bank  which  is¬ 
sued  it.  That  moment  a  bank  begins  to  feel  its  paper  come  in,  it  contracts  dis¬ 
counts,  in  order  to  husband  the  specie,  and  causes  a  pressure  in  the  immediate 
vicinity  of  its  vaults.  The  result  is  instantaneous;  runners  are  sent  out  by  its 
creditors  to  buy  up  bills  on  that  bank.  The  suspicion  widens;  merchants  re¬ 
fuse  it;  producers  refuse  it;  and  it  goes  home  into  the  vortex  of  a  domestic  re¬ 
vulsion.  Now,  the  people  of  this  Slafe  will  have  the  advantage  over  those  States 
where  banks  exist,  when  the  hundreds  of  banks  fail,  as  they  will  in  a  few  short 
years.  Knowing  well  that  they  can  exercise  no  control  upon  these  paper  money 
mills,  they  will  keep  up  a  watchful  interest  upon  the  moneys  market.  When 
the  paper  of  a  bank  is  below  par,  they  will  refuse  it.  The  merchant,  who 
goes  abroad  to  pay  for,  or  to  purchase  goods,  will  take  with  him  this  money. — 
And  during  the  premonitory  symptoms  of  the  crisis,  we  shall  return  this  trash 
into  other  States.  But  again,  supposing  we  should  lose  by  the  bank  paper  now 
afloat  from  other  States,  twenty  or  fifty  per  cent,  of  the  amount  amongst  us. — 
Suppose  we  are  told,  and  suppose  it  true,  that  if  the  best  market  for  bills  be¬ 
low  par  is  at  home,  yet,  does  it  follow  that  we  should  be  the  gainers  by  having 
banks  to  flourish  for  a  while,  and  then  explode  in  our  midst?  As  it  is,  we 
should  lose  only  the  per  cent,  upon  the  bills.  But  if  the  sums  were  issued  to 
us  by  banks  of  our  own,  it  would  be,  not  as  now,  for  produce  exported  and  sold , 
and  on  which  we  have  made  a  profit ;  but  it  would  be  loaned  to  us  on  our  notes 
of  hand,  secured  by  the  endorsement  of  friends,  and  covered  with  bonds  and 
mortgages.  The  argument  for  banks  of  our  own,  is,  that  we  shall  lose  by  thtT 
breaking  of  foreign  banks. 

But  have  not  our  own  banks  failed,  shamefully,  dreadfully  failed?  Did  we  lose 
our  bills  only?  Did  not  we  lose  not  only  our  own  bills,  but  in  order  to  pay  our 
notes,  did  not  our  personal  property  go?  Has  not  the  bank  sheriff"  sold  our  houses 
and  lands?  Now  the  small  amount  ot  paper  money  in  circulation  is  paid  for;  our 
people  have  paid  in  exports  for  their  paper  money.  On  those  they  made  a 
profit.  If  they  lose  that,  they  know  the  end  of  their  losses.  There  is  not 
enough  paper  in  circulation  to  affect  seriously  the  value  of  property.  The  loss 
would  not  be  sudden.  But  with  banks  in  our  midst,  which  many  of  us  would 
owe  as  principals  or  security,  with  their  net  work  intertwined  with  all  our  busi¬ 
ness,  when  they  should  fail,  the  ruin  would  be  complete,  the  evil  universal. 
The  financial  distresses  of  1841  and  ’2,  from  which  we  are  now  emerging  would 
be  renewed  periodically  every  few  years  of  our  history. 

In  conclusion,  your  committee  would  further  say,  that  they  are  settled  in  the 
opinion,  that  the  real  interest  of  the  State  of  Illinois  could  not  be  advanced  by  a 
return  to  any  system  of  banking.  We  are  now  free  from  those  institutions. 
They  no  longer  detain  our  legislation,  nor  eat  out  the  substance  of  our  people. 
The  evils  of  foreign Hank  paper  are  the  least  of  all  the  countless  evils  they  have 
inflictedupon  us.  Banks  in  our  midst,  might  make  a  few  officers  and  a  few 
citizens  rich;  but  this  would  be  an  advantage  gained  at  the  less  of  principle. 
Th  is  would  be  gained  at  the  expense  of  the  morals  of  thousands;  and  the  few 
millions  thus  heaped  upon  bank  managers  and  favorites,  would  be  gathered  from 
the  honest  labor  of  the  masses.  Then  let  matters  remain  as  they  are;  let  liberty 
always,  and  monopolies  never,  be  the  maxim  of  our  legislation;  and  Illinois 


8 


•*. 


J 

W  T / 

/  /  * 

will  soon  be  one  of  the  freest,  happiest,  and  richest  States  of  the  American 

commonwealth. 

Your  committee  would,  therefore,  earnestly  express  the  hope  that  our  noble 
young  State  may  never  return  to  that  system  of  banking  which  has  exercised 
such  blighting  influences  upon  the  energies  of  our  people,  and  that  they  will 
hereafter,  by  every  legitimate  means  within  their  power,  discourage  both  the 
emission  and  circulation  of  paper  money  in  all  its  forms. 

The  State  Bank,  and  Bank  at  Shawneetown,  which  for  years  have  pressed  like 
an  incubus  upon  the  energies  of  the  whole  community,  -  and  spread  bankruptcy 
and  ruin  throughout  our  borders,  are  now  quietly  going  out  of  existence 
under  the  operation  of  the  various  laws  putting  them  into  liquidation.  The  time 
heretofore  given  to  the  State  Bank,  for  winding  up  her  affairs,  will  expire  on  the 
4th  day  of  March  next.  The  reports  of  the  proper  officers  show  that  the  in¬ 
stitution  has  yet  outstanding  a  very  large  amount  of  indebtedness,  which  yoar 
committee  believe  is  principally  owing  by  citizens  of  our  State.  Those  whose 
duty  it  has  been  to  wind  up  the  affairs  of  that  institution,  have,  wflthin  four  years 
collected,  upon  an  average,  nearly  two  hundred  and  fifty  thousand  dollars  per 
annum.  And  your  committee  are  inclined  to  the  opinion,  that  this  is  as  much  as 
a  proper  regard  for  the  interests  of  the  debtor  class  of  the  community  would 
warrant.  To  have  forced  the  collection  at  once  of  all  the  debts  due  that  institu¬ 
tion,  would  have  created  a  demand  for  more  money  than  there  was  in  the  coun¬ 
try:  vast  quantities  of  property  would  have  been  sacrified,  and  thousands  of  hon¬ 
est  but  unfortunate  debtors  would  have  been  utterly  ruined.  And  even  now, 
to  compel  the  immediate  collection  of  the  remaining  debts  due  that  institution, 
would  cause  a  sacrifice  of  property  and  an  amount  of  distress  which  your  com¬ 
mittee  believe  it  to  be  the  duty  of  this  legislature  to  prevent,  so  far  as  a  proper 
regard  for  the  interests  of  the  creditor  of  the  bank  will  warrant.  To  use  the 
appropriate  language  of  the  executive,  “Banks,  from  the  very  nature  of  their  bu¬ 
siness  relations,  become  so  intimately  interwoven  with  all  the  varied  forms  of 
industry  within  the  influence  of  their  operations,  that  to  dissever  the  c-mru  't;r n 
without  producing  serious  injury  to  individual  interests,  often  requires  time,  and 
leads  to  no  small  difficulty.”  Your  committee  believe,  that  a  proper  regard  for 
the  interest  of  the  debtor  class,  absolutely  demands  an  extension  of  time  for  clo¬ 
sing  the  affairs  of  that  institution.  If,  upon  examination  of  all  the  facts  of  the 
case,  it  be  found  that  the  present  officers  have  been  derelict  in  their  duty,  or  have, 
through  party  feeling,  or  prejudice,  or  favoritism,  oppressed  one  portion  of  the 
community  at  the  expense  of  another,  we  would  recommend  that  her  affairs  be 
immediately  placed  in  the  hands  of  assignees. 

If,  on  the  other  hand,  it  be  found  that  they  have  in  all  respects  acted  honestly 
and  uprightlv,  and  have  pressed  the  affairs  of  the  institution  to  a  close,  as  fast  as 
could  be  done  without  producing  manifest  distress  among  her  debtors,  we  would 
recommend  that  they  have  further  time,  as  they  undoubtedly  are  better  acquain¬ 
ted  with  the  affairs  of  the  bank,  and  the  condition  of  its  property  and  debtors, 
than  any  stranger  could  possibly  be.  But  whatever  may  be  done,  we  should  be 
careful  to  leave  no  spark  of  vitality  in  the  Bank  or  its  charter,  and  to  prepare 
all  necessary  guards  to  prevent  the  future  resuscitation  or  recharter  of  any 
bank  within  our  State. 


